2025-07-16 21:36

SINGAPORE, July 16 (Reuters) - The International Air Transport Association on Wednesday stepped up criticism of the European Union's sustainable aviation fuel mandate as a costly initiative that is not helping the environment as regional supplies there remain low. "The idea that you're buying sustainable fuel and then transporting it to use in Europe isn't the right way to do it, because you're clearly increasing the carbon footprint of that fuel as a result of the transportation costs," IATA's director-general Willie Walsh said at a media roundtable in Singapore. Sign up here. IATA estimated in June that production of SAF, which is considered a low-carbon replacement for traditional jet fuel, is expected to reach 2 million metric tons, or 0.7% of airlines' fuel consumption, in 2025. "Mandating the use of a product that isn't available doesn't lead to any environmental benefit," Walsh said, adding that fuel companies that have an obligation to produce SAF are also increasing the cost of traditional jet fuel. By IATA's assessment, he said "the cost that they're charging is way in excess of the actual cost of the limited supplies of sustainable fuel." "The EU in effect has facilitated monopoly suppliers to increase prices with no environmental benefit," said Walsh, adding that the region needs to re-evaluate its SAF targets. Under the ReFuelEU Aviation requirement, airlines need to have a 6% SAF blend in their jet fuel usage by 2030. The EU is offering some subsidies for SAF purchases by airlines, Reuters reported in June. On the supply front, at least five SAF projects in Asia, outside of China, have started up or are earmarked to start production this year, targeting exports regionally and to Europe. Singapore is among key exporters of the green fuel to the EU. Walsh also questioned the use of palm oil as a means to produce sustainable fuel. "I think that you could argue there is sustainable palm oil and there is palm oil that wouldn't be considered sustainable, and I think in some parts of the world there it's too black and white," Walsh said. We need to have a much more "nuanced approach" to the usage of palm oil as a feedstock and "much more detailed assessment of the sustainability of the feedstock", he added. https://www.reuters.com/sustainability/eus-buying-green-fuel-outside-meet-its-targets-is-not-making-sense-iata-says-2025-07-16/

2025-07-16 21:18

S&P 500 fell briefly by up to 0.7%, following reports that Trump was close to firing Powell Strategists view market reaction as muted Analysts noted that market participants are used to Trump's shifting positions Experts warned that if the administration were to actually remove Powell, more severe volatility could ensue NEW YORK, July 16 (Reuters) - Investors are becoming more measured in their reaction to news about Trump's Washington policy, with Wednesday's whipsawing headlines over Federal Reserve Chair Jerome Powell triggering a reaction that fell short of what could happen if the Fed chair was indeed fired. The S&P 500 briefly fell as much as 0.7% and the dollar sank 0.9% on Wednesday following reports Trump was close to firing Powell. Sign up here. To some investors, the initial knee-jerk moves - soon to be unwound as Trump denied he was planning Powell's ouster from the Fed - seemed relatively shallow and pointed to investors being unwilling to put too much stock in headlines involving Trump administration policy. Part of the reason for the market’s reaction is that investors have learned from experience that news headlines about potential actions by the Trump administration can change rapidly, market participants said. "I think there is a group of people who thought it was a trial balloon," Thierry Wizman, global FX and rates strategist at Macquarie in New York, said. "That it was not serious, that it was just Trump testing the market and that if the market fell too much, he would change his view in any case so there's no reason to bid stocks down excessively," he said. The White House declined to comment on whether Trump was testing the market, instead pointing to his remarks earlier in the day where he said he is not planning to fire Powell even as he unleashed a fresh round of criticism against the central bank chief and declined to completely reject the possibility of ousting him. Trump, who in the past has suggested he could fire Powell, has also at various times said he would not do so. Bloomberg News, which first reported Trump was planning to fire Powell soon, did not immediately respond to a request for comment. "We don’t know if Trump will follow through on the threat," Brian Jacobsen, chief economist at Annex Wealth Management, said. The many twists and turns in U.S. tariff policy since the start of the year have already inured investors to abrupt changes in policy. "Traders and investors have learned to take political posturing with a grain of salt," said Karl Schamotta, chief market strategist at Corpay. The limited reaction, especially in stock markets, also points to some investors seeing Powell's potential ouster as clearing the path for rate cuts, some analysts said. "There is an element of the market that wants to see lower rates in the short term ... they're happy to have the Fed cut," Wizman said. Worries over the Fed's independence notwithstanding, lower rates would reduce borrowing costs for companies, potentially encouraging investment and boosting corporate profits, while also making stocks relatively more attractive compared to lower-yielding bonds and savings. "Perhaps there are some traders who like the idea of lower rates more than the loss of independence," Steve Sosnick, chief strategist at Interactive Brokers, said. 'MINI-TANTRUM' Still, market participants warned that Wednesday's market gyrations, fleeting as they were, offered a glimpse on how global financial markets might react should Powell be ousted. "This morning’s mini-tantrum provided the administration with a clear warning of the negative consequences," Schamotta said. "Today's episode provided a tiny taste of the cataclysmic moves that could unfold if the Trump administration actually moved forward with untethering the world’s monetary anchor," he said. Investors had been on edge for weeks about the prospect of Powell being removed from his job before his term ends next May, as Trump has repeatedly criticized him for not cutting U.S. rates quickly enough. Even if Trump doesn't fire Powell, just nominating a successor - something Trump has said he is considering - would trouble the market, investors said. The nomination of the next Fed Chair so far in advance of the end of Powell's term would create the likelihood of a "shadow" Fed chair who offers potentially clashing views with the sitting central bank leader on monetary policy. This could potentially sow confusion in the market about the outlook for monetary policy, investors said. Such threats to the Fed's perceived independence could push investors to lighten exposure to dollar-denominated assets and revive the worries about investing in America that surfaced earlier this year when Trump first slapped hefty tariffs on global trading partners, strategists said. "This is part and parcel of the thing we've already been growing accustomed to," Macquarie's Wizman said. "It's a theme that has weakened the dollar since the beginning of the year. It's a theme that has caused long-term yields to go up," he said. For now, investors remain on edge about whether Trump will end up firing Powell. "Trump in particular seems to take umbrage at the idea that he doesn't follow through on some of these things. So it wouldn't surprise me if they did. It wouldn't surprise me if they didn't," said Rick Meckler, a partner at Cherry Lane Investments in New Vernon, New Jersey. https://www.reuters.com/business/finance/investors-become-inured-policy-whiplash-powell-headlines-cause-limited-reaction-2025-07-16/

2025-07-16 21:04

ORLANDO, Florida, July 16 (Reuters) - TRADING DAY Making sense of the forces driving global markets Sign up here. By Jamie McGeever, Markets Columnist A dramatic day on Wednesday ended with Wall Street in the green and the dollar and short-dated Treasury yields lower, although off their earlier extremes, after President Donald Trump denied reports he will soon fire Fed Chair Jerome Powell. More on that below. In my column today I look at Trump's call for 300 basis points of Fed rate cuts and, although it is wishful thinking, why it shines a light on whether Fed policy is too tight, too loose, or maybe just about right. If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. Today's Key Market Moves Trump-Powell drama sizzles, dollar fizzles At around midday in the U.S. session on Wednesday, it looked like six months of verbal attacks on Fed Chair Jerome Powell from President Donald Trump for not cutting interest rates were about to reach boiling point - according to Bloomberg News, Powell would soon be fired. The market reaction was what you might expect - the dollar, stocks, and short-dated Treasury yields fell, and the yield curve steepened. The most notable moves were in the dollar and two-year yield. But Trump swiftly denied the report, insisting that although he had discussed ousting Powell with lawmakers, it was "highly unlikely" he would fire him. Markets recovered their poise, especially stocks, although the rebound in short-dated yields and the dollar was less pronounced. Trump firing Powell would be a monumental event as no president has ever formally dismissed a Fed Chair. But it would come as little surprise. Trump's desire for lower interest rates is ferocious, and he regularly berates Powell for not cutting them. Political interference in monetary policymaking? Yes, but Trump crossed that Rubicon some time ago. Rates traders still expect no change from the Fed on rates later this month and a quarter point cut by October. They added around 10 bps of expected easing into next year's forecasts. Even at the depths of the selloff on Wednesday Wall Street's main indices were never down more than 1%, perhaps reflecting investors' skepticism that Trump really will pull the trigger. But it's noteworthy given that the S&P 500 and Nasdaq had clocked new highs the day before - there's scope for a deep correction if investors want one. The latest twist in the Trump-Powell saga dominated the U.S. session and will likely be the main driver of global markets again on Thursday. But investors have other signposts to guide them, including corporate earnings, tariffs and economic data. On Wednesday, three of America's biggest banks reported results - Bank of America, Morgan Stanley and Goldman Sachs. On Thursday the spotlight turns to Netflix, and before that in Asia, Taiwan's TSMC, the world's main producer of advanced AI chips. Trump boxes in Fed with extreme rate cut calls While almost no one thinks Donald Trump's verbal attacks on Federal Reserve Chair Jerome Powell are a positive development, they have electrified the debate about whether the U.S. president is right that interest rates are too high. Presidential tirades aside, there is a strong case to be made that the fed funds rate should be lower than its current 4.25-4.50% target range. The labor market is beginning to show signs of cracking, 'hard' economic data is softening, and a tariff-led slowdown may be in the offing. On the other hand, economic growth is clocking in at an annualized pace of around 2.5% and not expected to dip much below 2% next year, unemployment is still historically low, the stock market is at a record peak, and other financial assets like bitcoin have also never been higher. And, crucially, core inflation is still almost a percentage point above the Fed's 2% target, suggesting that we may be starting to see the inflationary impact of tariffs. By those measures, policy may be too loose, not too tight. Indeed, Jason Thomas, head of global research and investment strategy at Carlyle, reckons financial conditions are "unusually accommodative", and argues that had the Fed not said in December that policy was 'restrictive', there would be no need to explain why it hadn't cut rates six months later. The president clearly does not agree. Trump is clamoring for borrowing costs to be slashed by 300 basis points. That would take the policy rate closer to 1%, a level usually associated with severe financial market stress, strong disinflationary pressures or a deep economic funk. Or all three. R-STAR GAZING One would be hard-pressed to find many experts who would agree with Trump's call, even those who fall on the dovish side. But then where should rates be? Policymakers typically use forward-looking models and frameworks to inform their decisions. The most famous of these, so-called 'R-Star', comes in for a lot of criticism, as it is theoretical, referring to the inflation-adjusted long-term neutral interest rate that neither accelerates nor slows growth when inflation is at target. This may be a fuzzy concept, but officials look at it, so investors cannot dismiss it completely. There are two benchmark 'R-Star' models, both partly created by New York Fed President John Williams. One currently puts this rate at around 0.80% and the other around 1.35%. If inflation were at the Fed's target 2%, then these models would put the nominal fed funds rate at around 2.80% or 3.35%, respectively. Fed policymakers split the difference in their latest median projections, putting the long-term nominal Fed funds rate right at 3.00%. If these estimates are anywhere close to accurate, the nominal policy target range of 4.25-4.50% now appears to be restrictive, so the path ahead is lower. Rates traders and investors seem to agree. While the latest CPI report has caused jitters at the long end of the yield curve, rates markets are still pricing in more than 100 basis points of easing over the next 18 months. But this has helped fuel the asset price rally, which, ironically, strengthens the argument that policy may be closer to neutral than models suggest. WISHFUL THINKING Powell may have backed the Fed into a corner by maintaining that policy is still restrictive, albeit "modestly" so. These claims signal the Fed will lower rates, but it has not done so, as it is waiting to see if Trump's protectionist trade agenda unleashes inflation. Moreover, it also does not want to appear to be responding to political pressure to cut rates. "Some will say this collision was unavoidable. But the Fed would find itself in a far more defensible position had it embraced a posture of neutrality, pledging to cut or hike as warranted by future developments (including policy shifts)," Carlyle's Thomas wrote on Tuesday. In short, the Fed is in a bit of a bind, and Trump's attacks will only make it worse. His call for 300 basis points of rate cuts may end up being similar to his 'reciprocal tariff' gambit: aim extremely high, settle for something less, and claim victory. The problem, of course, is that monetary policy is not supposed to be a negotiation. What could move markets tomorrow? Want to receive Trading Day in your inbox every weekday morning? Sign up for my newsletter here. Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles , opens new tab, is committed to integrity, independence, and freedom from bias. https://www.reuters.com/world/china/global-markets-trading-day-graphics-2025-07-16/

2025-07-16 20:58

TSX ends up 0.4% at 27,152.97 Tech sector rises 1.6%, financials add 0.9% Energy loses 1.1% as oil settles lower Cogeco Communications drops 8.5% after revenue miss July 16 (Reuters) - Canada's main stock index rose on Wednesday, with the financial and technology sectors posting gains as investors shrugged off increased uncertainty about the leadership of the Federal Reserve. The S&P/TSX composite index (.GSPTSE) , opens new tab ended up 98.83 points, or 0.4%, at 27,152.97, moving closer to the record closing high it posted on Tuesday. Sign up here. Wall Street benchmarks also ended higher despite a chaotic half hour when news reports suggested U.S. President Donald Trump was set to fire Fed Chair Jerome Powell. "Markets, as they always do, they look forward six to 12 months," said Stan Wong, a portfolio manager at Scotia Wealth Management. "In Canada, the market has rebounded from its worst fears of what the economy would look like which would be a tremendous amount of trade and tariff uncertainty. We've gotten a little bit more color and more clarity around that." Prime Minister Mark Carney said Canada will introduce a tariff rate quota for countries with which it has free trade agreements, excluding the United States, to protect the domestic steel industry. "Compared to the U.S., valuations remain compelling in Canada and if (interest) rates move lower then the dividend yields, which are higher in Canada, will be a big draw for investors," Wong said. The Canadian 10-year yield eased 3.3 basis points to 3.578%, pulling back a one-year high the day before. Technology (.SPTTTK) , opens new tab rose 1.6%, with shares of e-commerce company Shopify Inc (SHOP.TO) , opens new tab ending nearly 4% higher. Heavily weighted financials (.SPTTFS) , opens new tab were up 0.9% but energy (.SPTTEN) , opens new tab was a drag, falling 1.1% as the price of oil settled 0.2% lower at $66.38 a barrel. Giant shovels, driverless trucks and a dog-like robot have all helped Canada's oil sands companies become some of North America's lowest-cost oil producers. The materials group (.GSPTTMT) , opens new tab, which includes metal mining shares, lost 0.6% as copper prices fell. Cogeco Communications (CCA.TO) , opens new tab missed estimates for quarterly revenue. The telecommunications company's shares ended 8.5% lower. https://www.reuters.com/markets/europe/tsx-futures-flat-ahead-us-inflation-data-2025-07-16/

2025-07-16 20:57

WASHINGTON, July 16 (Reuters) - Recent data on consumer inflation showed price pressures may be building in the wake of rising import taxes imposed by the Trump administration, Atlanta Fed President Raphael Bostic said on Wednesday. "We may be at an inflection point," Bostic said in comments to Fox Business' Claman Countdown, a day after data for June showed prices rising faster than the month before with particularly large increases for some categories of heavily imported goods. "The headline number moved away from our target, not towards it...We've seen the highest increase in prices that we've seen all year." Sign up here. The Consumer Price Index rose 2.7% in June compared to 2.4% in May. Bostic noted that nearly half of the products showed an increase of 5% or more, nearly double the share seen in January -- a metric Bostic has focused on as evidence of inflationary pressure spreading in the economy. "We are seeing things underlying in the economy that suggest inflation pressures are up, and that's really a source of concern," said Bostic. While not a voter in rate policy this year, he has said he feels the Fed needs more data before deciding to resume rate cuts, and that only a single quarter-point reduction is likely to be warranted this year given the uncertainty over how tariffs will affect prices. Investors expect two cuts, beginning at the Fed's September meeting. "The price pressures are real," Bostic said, referring to conversations he and his staff have had with regional business officials. The Fed's focus on tariff-driven inflation and the reluctance to cut interest rates has angered President Donald Trump, who wants deep cuts to the Fed's current benchmark rate of 4.25% to 4.5%. News reports on Wednesday that Trump was nearing a decision to try to fire Powell sparked a sell-off in stock and bond markets that reversed after the president clarified that he had no plans to dismiss the Fed chief -- as much as he says he would like to replace him. Bostic said he tried not to focus on the many news reports about the Fed. "We've got a very complex situation in terms of the economy," Bostic said, with his attention on "the things that actually matter." https://www.reuters.com/business/feds-bostic-recent-data-show-price-pressures-may-be-building-2025-07-16/

2025-07-16 20:53

NEW YORK, July 16 (Reuters) - Phillips 66 (PSX.N) , opens new tab has partially shut its 258,500 barrel-per-day Bayway refinery in Linden, New Jersey, after rainstorms in the region caused a power outage at the plant, three sources familiar with the matter said. Phillips 66 confirmed the power outage, but declined to provide more details. Sign up here. A computer that monitors emissions from the refinery's flare stack was damaged during flooding, according to a report filed with the New Jersey Department of Environmental Protection (DEP) on Tuesday. All other monitoring equipment was functioning normally, the report said. There was no major damage to critical infrastructure, and the refinery's flares were working properly after the overnight power outage, the Linden Police Department posted on Facebook on Tuesday. Another report filed with the DEP on Tuesday noted that the sewer system at the refinery was leaking unknown amounts of residual oil into the Morses Mill Creek. Phillips 66 was actively purchasing refined products from the New York Harbor spot market since Tuesday, two market participants said. https://www.reuters.com/business/energy/phillips-66s-bayway-refinery-partially-shut-after-power-outage-sources-say-2025-07-16/